Industry News
SRS Capital Enters Chapter 7 Bankruptcy
January 4, 2021SRS Capital, a merchant cash advance company based in Long Island, NY, has entered Chapter 7 bankruptcy, according to court documents obtained by deBanked. In September, several of the company’s creditors petitioned for involuntary bankruptcy. Although it was contested by SRS, the Court granted relief under the Code and appointed a trustee.
The primary entity is listed as SRS Capital Funds, Inc.
The company had revenues of $1.5 million in 2020.
The proceedings are ongoing. SRS Capital’s website is presently offline.
deBanked Meme Time – Happy Thanksgiving
November 21, 2020It’s Thankgiving time, which means…. more deBanked memes! This tradition started 8 years ago. Enjoy the holidays and be safe!
In Loving Memory of Elliot J Dabah
November 17, 2020
Elliot J Dabah, CEO of NYC-based Merchants Cash Partners, LLC, recently passed away. Known throughout the merchant financing industry, friends and colleagues began collecting kind words to reflect on his life to be able to share them here.
Elliot Ashkenazie, his business partner and best friend, said “Elliot Dabah would step up and help anyone in need whether that be his own employee, another ISO, or a complete stranger on the street. He didn’t keep any secrets so he would have an advantage over others, he simply paid it forward and helped the community as a whole benefit from it. Merchants Cash Partners will work tirelessly to carry on his legacy and his values.”
“Elliot Dabah was the heartbeat of the Financial District and he was an integrated part of my life, both professional and personal,” said Gigi Russo. “Not only did Elliot and I live three blocks from each other, but I first had the privilege and pleasure of meeting him while I was working for deBanked, at CONNECT San Diego. We quickly became close friends. He truly never took advantage of our tight knit friendship. His professional support was a reflection of his character— a respectable person that respected his family, friends and business associates. Elliot wanted everyone to succeed. He believed that friends and business colleagues should support one another to build a viable network.”
Tom Dool of Power Funding, said “Of all of the offices I’ve ever visited, I can honestly say that no other partner of mine compares to Merchants Cash Partners. From the moment I met both Elliots, they were inviting. I could tell right away that they had a special bond of shared enthusiasm, honesty, generosity, thoughtful, caring people.” He adds, “Elliot [Dabah] lived life with such a genuine love for people and getting to know people, discussing higher level ideas, sharing feelings. He was one of the best and I’ll never forget him.”
“Elliot was one of the most welcoming people I had the pleasure of knowing,” says Colt Kucker of Libertas Funding, “and always tried helping out whether it be a customer, myself, or anybody in need. He was a hard worker and will truly be missed by all he came across.”
Justin Friedman of Enova SMB, described Dabah, “Smart, strategic, urgent, generous and wise are a few words to describe Elliot. He was universally popular and a known professional in our industry, which isn’t common to come by. He cared about his customers and business relationships. Elliot’s presence in alternative lending was a positive one and he will be remembered for exactly that.”
Ben Lugassy of SOS Capital states that he was “Always smiling and enthusiastic, Elliot was the embodiment of joyful. A friend with tremendous respect and gratitude, he will always be remembered and in our prayers.”
Paul Boxer of Velocity Capital Group added, “Every-time I met Elliot he had the largest smile, always happy to talk shop and discuss the industry. He was very knowledgeable and had a wealth of information, he will surely be missed.”
Ken Peng of Elevate Funding recounts that Elliot, “was always great to work with. He was always very friendly and understanding when we did review any of his files. He will be missed.”
Gigi Russo, who was instrumental in putting this tribute together, further added that Elliot “treated everyone he came into contact with as a friend.” He has “a sincere, dignified, and affable reputation that will follow him after his passing. He will surely be remembered for supporting his colleagues, clients, business acquaintances, and network. The legacy Elliot has left behind is simple: Respect one another. Support one another. Honesty and hard work are necessities of success.”
Part of Elliot’s legacy is the company he built. Merchants Cash Partners, despite the pandemic, was so successful this year that it outgrew its office space.
“Elliot had a revolutionary style of making this industry a community,” says his partner Ashkenazie. “He referred clients and prospects alike to small firms and national firms, expecting nothing in return.”
Coincidence would have it that a photo of Elliot at a deBanked event was often used in event marketing promotions. As to how that picture came to be used so prominently, deBanked President Sean Murray said that “Elliot embodied the community we were trying to portray. A nice young business professional who radiated positive energy. Who is part of this industry? It’s guys like Elliot. That’s what we wanted everyone to know.
“Elliot totally noticed how often we were sharing his photo,” Murray said. “He told me that he thought that was pretty cool.”
Neuberger Berman Acquires Significant Stake in IOU Financial
November 4, 2020
Neuberger Berman, an investment manager with $374B under management, is acquiring a 15% stake in IOU Financial, a small business lender. As part of the deal, one of the firm’s funds has agreed to purchase up to $150M a year of IOU’s loans over the next two years.
“This investment by a Neuberger Berman managed fund represents a strong vote of confidence in the fundamental, long-term value of our business, and is a testament to IOU’s loan origination and servicing capabilities in addition to its capital markets capabilities” said Phil Marleau, CEO of IOU, in a public statement.
Additionally, Neil Wolfson, a former board member to rival OnDeck, is joining IOU’s board of directors.
Franklin Capital Group Has Been Acquired
October 23, 2020
This month, Franklin Capital Group was acquired by Wing Lake Capital Partners with the help of Rocky Mountain Bank. Franklin Capital will change its name and add funding capability- but the entire team will stay on. CEO Shaya Baum was happy to announce the deal, explaining that the firm would use acquisition funds to create more deals and continue to grow.
“It gives us the ability to fund many deals that are outside of our box previously,” Baum said. “We’re going to be launching a couple of sister funds alongside what we currently have and scale the business.”
Franklin Capital was founded in 2012 as an equity fund for companies in financial trouble during, before, or post-bankruptcy. The firm discovered a market for refinancing MCA advances, finding companies that should have never obtained cash advances in the first place. Franklin Capital began offering a product to refinance cash advances through traditional loans.
“We buy out the cash advance deals,” Baum said. “In fact, most if not all of our deals come from brokers in the cash advance industry saying ‘Hey can you get us out of these deals?'”
Baum said that his firm had seen a continually growing demand for capital this year.
“I know the cash advance companies have gotten killed, but we’ve actually had the opposite problem,” Baum said. “We don’t do one-off restaurant [advances.] We’re dealing with companies that are larger, more established: they’ve all pivoted into industries that have grown during this period of time.”
DailyFunder Still #1 Small Business Finance Community
October 14, 2020
DailyFunder, the small business finance forum founded by Sean Murray in 2012, continues to be the leading online community for the industry, according to a recent announcement. The forum recently surpassed 10,000 registered members, in addition to logging more than 2 million page views just in 2020 so far.
“The forum has attracted well over a million visitors since inception and users have historically spent longer than 10 minutes on the site in any given session on average,” Murray said.
deBanked’s parent company fully acquired DailyFunder earlier this year. The announcement was featured prominently in deBanked’s January/February 2020 magazine issue. In it, Murray renewed the website’s objective:
“The mission will be to create a great forum for those involved in day-to-day dealmaking,” he said in a Q&A. “How can we provide a platform that enables those in the industry to make more money? That’s the way I look at it. I think if we can provide that type of value, success will follow.”
The Roosevelt Hotel is Closing Permanently Due to Pandemic Losses
October 13, 2020
After nearly a century of quintessential Manhatten hospitality, the Roosevelt Hotel is closing by the end of the month, sources say. A relic of classic New York that survived the Great Depression, WWII, and Broker Fair 2019, the hotel is officially shutting down for good after suffering pandemic related losses, a spokesperson said.
“Due to the current, unprecedented environment and the continued uncertain impact from COVID-19, the owners of The Roosevelt Hotel have made the difficult decision to close the hotel, and the associates were notified this week,” the Spokesperson told CNN reporters Friday. “The iconic hotel, along with most of New York City, has experienced very low demand, and as a result, the hotel will cease operations before the end of the year. There are currently no plans for the building beyond the scheduled closing.”
The hotel will be added to the growing list of staple New York City businesses that have closed as a result of COVID. The Roosevelt was named and built to honor the United States’ 26th president and it opened its doors on September 22, 1924. Constructed during Prohibition, the building began the modern trend of featuring designer store windows on the street front.
Appearing as a backdrop for dozens of Hollywood blockbusters like Boiler Room, Malcolm X, and The Irishman, the hotel was iconic. The New Year’s Eve tradition of singing “Auld Lang Syne” was born at the Roosevelt in 1929 when Guy Lombardo and his orchestra broadcast the song live over the radio.
The building was purchased by the limited investment branch of Pakistan International Airlines (PIA) in 1999.
In July, government officials and PIA executives debated the hotel’s future, some hoping rumors that President Trump would purchase the property were true. The initial plan was to sell or renovate the city block to create office space, thought to be far more lucrative than the hotel business in 2019. Work-from-home orders threw a wrench into the cogs, and the hotel kept losing money: no one wanted the traditional New York experience during a pandemic.
Posting a loss during this year has become expected of the hospitality industry. According to the Bureau of Labor Statistics, hospitality lost 7.5 million jobs due to shutdowns and travel restrictions in April. CNN reported that only half as many jobs had been added back. In September, NYC hotels were below 40% occupancy.
The decision to ultimately close The Roosevelt might also come from trouble in PIA’s airline business. After the crash of PIA flight 8303 that killed 97 people in Havelian, Pakistan, European and US regulators banned flights from PIA for six months. After the crash, nearly one-third of airplane licenses in Pakistan were found to be fraudulent or forged, further straining the organization’s ability to recover.
Though this may have contributed to The Roosevelt’s closure, the pandemic sealed the deal. According to a study by the American Hotel & Lodging Association, New York has 2,336 hotels statewide that have lost 43,014 jobs this year.
Without further congressional aid, 1,565 hotels might close: the AHLA found that 74% of overall US hotels say more layoffs are coming if the industry doesn’t get additional federal assistance. But successful talks for more aid in the House and Senate are increasingly unlikely due to this election year’s heightened partisanship.
NYC is losing yet another historical business, as the way of life and all things we have come to expect from the big apple struggle to survive. As a destination venue, The Roosevelt was also dear to deBanked. It was the home of Broker Fair 2019, where Sean Murray spoke in the same ballroom that Michel Douglas (as Gorden Gekko) made the famous “Greed is Good” speech as part of the 1987 film Wall Street. Murray made a similar speech but rewrote it to fit the industry that had gathered. “Funding small business, for lack of a better phrase, is good,” he said on stage to an audience of 700 people.
Unfortunately, it was The Roosevelt that ultimately needed funding and didn’t get it.
OnDeck / Enova Merger Overwhelmingly Approved by Shareholders
October 8, 2020The drama surrounding what OnDeck allegedly did or did not disclose to shareholders about the Enova merger presumably came to an end on Wednesday. 38 million voting shares approved the deal while less than half a million voted against it.
However, shareholders sent a message by voting against “the compensation that may be paid or become payable to the Company’s named executive officers that is based on or otherwise relates to the merger.”
OnDeck has said that the merger is expected to be completed in the fourth quarter of 2020.
